The research and development tax relief programme is a government sponsored tax break for businesses undertaking research and development activities. Here, we explore the top 6 questions we are frequently asked by our clients.
1 – What are R&D tax credits?
R&D tax credits is a government sponsored programme committed to rewarding UK companies that are developing new or appreciably improved products or processes with tax relief. This could be in the form of a cash payment or reducing/offsetting an outstanding corporation tax liability.
Recent government reports suggest that there are many companies who have not claimed the relief they are entitled to meaning that they have paid too much tax!
2 – Will it really result in a cheque from the HMRC?
If you meet the research and development claiming criteria and have paid corporation tax OR have operating losses then it is very likely a cash benefit will be available from the HMRC. Typically, we can carry out and complete a claim within just 3-5 weeks.
3 – How much money could I get back?
It entirely depends on your company’s activities, what level of R&D a company is undertaking and the financial resources applied. The best way to find out is to speak to one of our R&D tax consultants. However, you should expect a tax benefit somewhere between 13% and 33% of eligible expenditure depending on a company’s tax position. The average claim for a UK SME is £49,000.
4 – And how much of my time will it take? Will it be worth it?
Our technical R&D experts who have academic/industry backgrounds in software, chemistry, manufacturing and engineering will ensure the process is simple and efficient. In total, our R&D team takes no more than 3 to 4 hours of time to advise eligibility and formulate an R&D study – for a potential benefit of £49,000!
5 – What costs can I claim back?
Employee salaries, scrapped or consumed materials (including through prototyping) and subcontractor costs directly related to the research and development project can be claimed as well as a proportion of light, heat and power costs.
6 – How would I know if my company qualifies?
As a general rule of thumb, if companies are developing new or improving processes, products, techniques, or software there is a strong likelihood of claiming R&D relief. The best way to confirm your eligibility is to complete our questionnaire following which one of our R&D tax experts will come back to schedule a free assessment of your claim which will include an estimated range of your tax savings.
Morgan Reach is a well-established accountant firm with offices in London and Birmingham. Well known for its innovative approach and placing its clients at the forefront of the practice, Morgan Reach provides a variety of accounting services such as compliance, tax services, company secretarial services, business consultancy and accounts as well as strategic growth advice for an extensive range of business sectors including manufacturing, healthcare, construction and property, retail and entertainment, media and the sports sector.
DISCLAIMER: This article is for guidance only, and professional advice should be obtained before acting on any information contained herein. Morgan Reach Chartered Certified Accountants cannot accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the content of this article.